Vol. 13 · pages 256–260

First Schedule such capital and recurring sums as may be necessary to enable that State to meet the costs of such schemes of development as may be undertaken by the State with the approval of the Government of India for the purpose of promoting the welfare of the scheduled tribes in that State or raising the level of administration of the scheduled areas in that State to that of the administration of the rest of the areas of that State: 5 Provided further that there shall be paid out of the revenues of India as grants-in-aid of the revenues of the State of Assam sums, capital and recurring, equivalent to— 10 (a) the average excess of expenditure over the revenues during the three years imme- diately preceding the commencement of this Constitution in respect of the ad- ministration of the tribal areas specified in Part I of the table appended to para- graph 19 of the sixth Schedule; and 15 20 (b) the costs of such schemes of development as may be undertaken by that State with the approval of the Government of India for the purpose of raising the level of administration of the said areas to that of the administration of the rest of the areas of that State. 25 Taxes on professions, trades, call- ings and employments. 256. (1) Notwithstanding anything in article 217 of this Constitution but subject to the provisions, of clauses (2) and (3) of this article, the Legislature of a State shall have power to make laws with respect to taxes on professions, trades, callings and employ- ments for the benefit of the State or of a munici- pality, district board, local board or other local authority therein. 30 35 (2) The total amount payable in respect of any one person to the State or to any one municipality, district board, local board or other local authority in the State by way of taxes on professions, trades, callings and employments shall not exceed two hundred and fifty rupees per annum: 40 Provided that, if in the financial year immediate- ly preceding the commencement of this Constitution there was in force in any State or any such municiTHE GAZETTE OF INDIA EXTRAORDINARY, FEB. 26,1948 255 223THE DRAFT CONSTITUTION

pality, board or authority, a tax on professions, trades, callings or employments, the rate, or the maximum rate, of which exceeded two hundred and fifty rupees per annum, such tax may continue to be levied until provision to the contrary is made by Parliament by law. and any law so made by Parlia- ment may be made either generally or in relation to any specified States, municipalities, boards or authorities. 5 (3) The power of the Legislature of a State to make laws as aforesaid with respect to taxes on professions, trades, callings and employments shall not be construed as limiting in any way the power of Parliament to make laws with respect to taxes on income accruing from or arising out of professions, trades, callings and employments. 10 15 Savings. 257. Any taxes, duties, cesses or fees which immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parlia- ment. 20 25 Agreement with States specified in Part III of the First. Schedule with regard to the levy, collection and distri- bution of taxes and duties. 258. (1) Notwithstanding anything contained in this Chapter, the Union may, subject to the provi- sions of clause (2) of this article, enter into an agreement with a State for the time being specified in Part III of the First Schedule with respect to the levy and collection of any tax or duty leviable by the Government of India in such State and for the dis- tribution of the proceeds thereof otherwise than in accordance with the provisions of this Chapter and, when an agreement is so entered into, the provisions of this Chapter shall in relation to such State have effect subject to the terms of such agreement. 30 35 (2) An agreement entered into under clause (1) of this article shall continue in force for a period not exceeding ten years from the commencement of this Constitution: 40 256 THE GAZETTE OF INDIA EXTRAORDINARY, FEB. 26,1948 224 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES

Provided that the President may at any time after the expiration of five years from such com- mencement terminate or modify any such agreement if after consideration of the report of the Finance Commission he thinks it necessary to do so. 5 Calculation of “net pro- ceed”, etc. 259. (1) In the foregoing provisions of this Chapter, “net proceeds” means in relation to any tax or duty the proceeds thereof reduced by the cost of collection, and for the purposes of those provi- sions the net proceeds of any tax or duty, or of any part of any tax or duty, in or attributable to any area shall be ascertained and certified by the Auditor- General of India, whose certificate shall be final. 10 (2) Subject as aforesaid, and to any other express provision in this Chapter, a law made by Parliament or an order of the President may, in any case where under this Part of this Constitution the proceeds of any duty or tax are, or may be, assigned to any State, provide for the manner in which the proceeds are to be calculated, for the time from or at which and the manner in which any payments are to be made, for the making of adjustments between one financial year and another, and for any other incidental or ancillary matters. 15 20 Finance Commission. 260. (1) The President shall, at the expiration of five years from the commencement of this Constitution and thereafter at the expiration of every fifth year or at such other time as the President considers necessary, by order constitute a Finance Commission which shall consist of a Chairman and four other members to be appointed by the President. 25 30 (2) Parliament may, by law, determine the qualifications which shall be requisite for appoint- ment as members of the Commission and the manner in which they shall be selected. 35 (3) It shall be the duty of the Commission to make recommendations to the President as to— (a) the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under this Chapter and the allocation between the States of the respective shares of such proceeds; 40 THE GAZETTE OF INDIA EXTRAORDINARY, FEB. 26,1948 257 225THE DRAFT CONSTITUTION

(b) the principles which should govern the grants-in-aid to the States out of the revenues of India; (c) the continuance or modification of the terms of any agreement entered into by the Union with any State for the time being specified in Part III of the First Schedule as respects the levy, collection and distri- bution of any tax or duty leviable by the Government of India in such State; and 5 10 (d) any other matter referred to the Commission by the President in the interest of sound finance. (4) The Commission shall determine their proce- dure and shall have such powers in the performance of their functions as Parliament may by law confer on them. 15 Recommend- ations of the Finance Commission. 261. The President shall cause every recommenda- tion made by the Finance Commission under the fore- going provisions of this Chapter together with an explanatory memorandum as to the action taken thereon to be laid before Parliament. 20 Miscellaneous Financial Provisions Expenditure defrayable out of the revenues of India. 262. The Union or a State may make any grants for any public purpose, notwithstanding that the purpose is not one with respect to which Parliament or the Legislature of the State, as the case may be, may make laws. 25 Provisions as to the custody of public moneys. 263. (1) Rules may be made by the President and by the Governor of a State for the purpose of securing that all moneys received on account of the revenues of India or of the State, as the case may be, shall, with such exceptions, if any, as may be specified in the rules, be paid into the public accounts of India or of the State, and the rules so made may prescribe, or authorise some person to prescribe, the procedure to be followed in respect of the payment of moneys into the said account, the withdrawal of moneys thereform, the custody of moneys therein and any other matter connected with or ancillary to the matters aforesaid. 30 35 40 258 THE GAZETTE OF INDIA EXTRAORDINARY, FEB. 26,1948 226 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES

(2) Notwithstanding anything in this article, Parliament may by law regulate the custody of moneys received on account of the revenues of India their payment into the public account of India and the withdrawal of moneys from such account, and the Legislature of a State may by law regulate the custody of all moneys received on account of the revenues of the State, their payment into the public account of the State and the withdrawal of moneys from such account, and any rules made under this article shall have effect subject to the provisions of any such law. 5 10 Exemption of certain public pro- perty from taxation. 264. The property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by or by any authority within a State: 15 Provided that until Parliament, by law, otherwise provides, any property of the Union which was imme- diately before the commencement of this Constitution liable or treated as liable to any such tax shall, so long as that tax continues, continue to be liable or to be treated as liable thereto. 20 Exemption from taxes on electricity. 265. Save in so far as Parliament may, by law, otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the consumption or sale of electricity (whether produced by Govern- ment or other person) which is— 25 (a) consumed by the Government of India, or sold to the Government of India for consumption by that Government; or 30 (b) consumed in the construction, maintenance or operation of a Union railway by the Government or a railway company operat- ing that railway or sold to that Govern- ment or any such railway company for consumption in the construction, mainten- ance or operation of a Union railway, 35 and any such law imposing, or authorising the imposition of, a tax on the sale of electricity shall secure that the price of electricity sold to the Govern- ment of India for consumption by that Government, or to any such railway company as aforesaid for consumption in the construction, maintenance or 40 THE GAZETTE OF INDIA EXTRAORDINARY, FEB. 26,1948 259 227THE DRAFT CONSTITUTION